When you plan to start a business, one of the first things you will come across is either having a trading name or a business name. There is a lot of speculation and confusion around those two, but it's easier to understand than it might seem. Here's a short clarification so you can get started with choosing a name for your organisation.
What is a business name?
This is an official name that you use to run your business. Unless you're a sole trader operating under your personal name, every business needs to register a name with the Australian Business Register.
A business name is essential because it identifies you as a seller of goods or services, and it gives you a legal right to conduct your business in the country.
What is a trading name?
A trading name, on the other hand, is an alias. They were common in Australia before 2012 and represented a fictitious title under which a business could operate. So in addition to a bona fide business name, sellers could also have a number of trading names that they didn't have to register with a government authority.
The concept of a trading name has been around for a long time, and laws in other countries also recognise trading names. In the United States, for example, trading names are more commonly known as 'DBA names' or 'Doing Business As names.' Unless you're a sole trader operating under your own name, you have to register all DBAs with government bodies, depending on the state you do business in.
Trading names in Australia
If you started your business before 2012, you were able to use a trading name on your websites, billboards, social media profiles, or anywhere else you wanted.
For example, Mark Hannegan, who owned a cafe named "Cuban Caffeine," could have brochures and business cards that read "Café Cubbano" or "Cubbano Cappuchino."
In May of 2012, however, the Australian Business Register made it mandatory to register all business names. This included trading names. As a result, you can no longer legally use aliases to represent your business. Instead, you can register multiple business names—and pay for each—under one ABN.
For businesses that had been using trading names since before 2012, the ABR has set a transition period. It currently lists all known trading names, but that list is no longer being updated. The ABR will remove the list of trading names entirely on 31 October, 2023.
We hope this helps you understand why the term 'trading name' sometimes pops up interchangeably with 'business name.' If you have any other business questions you'd like us to answer, let us know in the comments and we'll cover them as soon as we can!